Question

JardCo purchased goods costing $3,000. The purchase was made on account with terms of 2/10, n/60. The original purchase was recorded with a DEBIT to Inventory and a CREDIT to Accounts Payable for $3,000. The account was paid in cash after eight days. Which ONE of the following is included in the journal entry to record the payment of cash on account after eight days?

Group of answer choices

CREDIT to Inventory for $60

DEBIT to Inventory for $60

DEBIT to Accounts Payable for $2,940

DEBIT to Cash for $2,940

CREDIT to Accounts Payable for $3,000

Answer 1

Correct answer-----------CREDIT to Inventory for $60

.

The complete entry on payment date will be as follows

General Journal	Debit	Credit
Accounts payable	$          3,000.00
Cash		$          2,940.00
Inventory		$                60.00

The payment is made with discount period that is 10 days.

There will be a discount of 2% on 3000 which will be credited to inventory to reduce inventory cost.